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Non-Tech : CompUSA (CPU) -- Ignore unavailable to you. Want to Upgrade?

To: Ed Stern who wrote (886)	12/20/1998 2:46:00 PM
From: Xpiderman	Respond to of 3187

CompUSA hits on hard times moneycentral.msn.com CompUSA investors have done lousy so far this year, with the stock down more than 50%. Benny Lorenzo, a portfolio manager with Aspira Capital Management L.P., believes CompUSA must come up with a new business model. Though branded with the name CompUSA, the company sells pagers, DVD video players, digital cameras, HDTVs and home networking systems. Soft money comes to them in the way of technical services and training classes. With more corporate customers in their sights, a new distribution center and 800 techies have been added for servicing corporate accounts. CompUSA also has recently swallowed competitor Computer City and has put a new emphasis on a "built-to-order" (BTO) model. CompUSA is expecting BTO models to help margins as a reduced inventory becomes less sensitive to product cycles and competitive price pressures. Standard & Poor's analyst Tom Graves rates the company a "hold." The consensus EPS estimates are for 76 cents in 1999 and $1.05 in 2000. This is up from an EPS of 70 cents (excluding charges) in 1998. The stock currently trades at a fairly pricey 76 times earnings. Even though net sales were up 17% for the first quarter this year, same-store sales were down 1.7%. However, a positive note was registered on the corporate front recently when CompUSA president and chief executive officer James F. Halpin bought 200,000 shares of the company's stock on the open market, which could indicate some optimism within the company. Details -------------------------------------------------------------------------------- Company Report 3-yr Chart Earnings Estimates Earnings Growth Rates Profit Margins 10-yr. Summary Sectors and Trends -------------------------------------------------------------------------------- Recent articles: • There's gold in garbage haulers by Mark Thompson, 12/7/98 • Clear connections for Europe telecom stocks by Mike Robbins, 11/30/98 • Radio broadcasters are getting in tune by Clint Willis, 11/23/98 more... Tough challenges for Circuit City Shares of Circuit City, the No. 2 electronics retailer with more than 560 locations in the U.S., have been on an upward swing lately and have climbed more than 30% over the past year. The company is an interesting turnaround candidate. Donald Trott of Brown Brothers said disappointing results in its used-car superstore subsidiary CarMax (KMX) and uncertainty in obtaining new financing for Divx (a new movie-rental format that doesn't require the renter to return the disc) have hurt the company. However, Trott said "Christmas sales will tell the financing tale for Divx." The Divx launch alone cost between $100 million and $300 million and according to Richard Sharp, chairman and chief executive officer, contributed to the 39.9% drop in profits in Circuit City's recent third-quarter report. Graves expects the dilution to be 15 cents against CarMax and 20 cents against Divx. Therefore, he has lowered his earnings per share estimates by 35 cents to $1.30 for 1999 and by 40 cents to $1.90 for 2000. However, analysts at Merrill Lynch believe Circuit City could be on the verge of turning around once the fate of these two ventures is resolved, although last month both Wheat First Union and NB Montgomery downgraded the stock to "hold." For these three electronics power hitters, much of the competition from major chains has disappeared as Incredible Universe, Crazy Eddie, Computerland and Sun TV have been exiled to the same island as Betamax. However Gateway (GTW) seems to be listening to its own drummer. While Internet sales seem to be all the rage, this company is branching into retail with more than 94 stores attracting new customers who want BTO but also want to see and feel the merchandise. One of the biggest challenges still remains the Internet. It has been a double-edged sword for electronics retailers. Cross believes most PC purchases are Web-driven as more Americans want to get online and some actually will even make their purchases online. Although shopping on the Web enables customers to research prices, product availability and configurations, the old-fashioned retailers provide advantages the Internet-only sellers can never offer: person-to-person guidance and the ability to touch the goods. Best Buy, CompUSA and Circuit City hope this will be the differentiating factor that will make this a great Christmas for their shareholders. Links Discuss It E-mail Risa E. Kaplan E-mail the Editors Product Support Top Terms of Use, and Privacy Policy. © 1996-1998 Microsoft Corporation and/or its suppliers. All rights reserved. Investor's editorial goal is to provide a forum for investment ideas. Our articles, columns, and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.